Thai Government to Pay Rice Debts As Tempers Hit Boiling Point

BANGKOK–Thailand’s embattled Prime Minister Yingluck Shinawatra promised to settle millions of dollars in overdue payments to the country’s rice farmers as anger against her government continued mounting Tuesday.

“The government’s financial position remains strong enough to seek loans to fund the [rice] subsidy,” Ms. Yingluck told reporters following the Cabinet’s approval of a proposal to draw 712 million baht ($21.7 million) from the government budget to settle overdue payments for some 3,900 farmers.

Associated Press

A rice farmer listens to protest leaders during a march demanding payment of a rice subsidy program from the government in Bangkok on Feb. 10.

Ms. Yingluck explained that the problem with the loan was caused by “misunderstandings” and said it should be sorted out through talks, “for the sake of affected farmers.”

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The payments are part of a highly controversial rice subsidy program that was one of Ms. Yingluck’s election campaign promises. Since its implementation in October 2011, the government has been buying rice from Thai farmers at up to 50% above the market rate and withholding it from the world market in hopes of driving up global prices.

The populist policy has left the government with about 18 million tons of rice—nearly twice the amount of rice the country exports in a normal year. At the same time, rice prices have continued to decline on a surge in global supply, making it difficult for the Thai government to sell its surplus without suffering losses.

Since late last week, hundreds of farmers have been rallying in front of the Commerce Ministry headquarters on the outskirts of Bangkok to demand the money the government owes them.

The growing discontent among the country’s farmers, many of whom helped elect Ms. Yingluck, could further erode support for her leadership at a time when government opponents are stepping up pressure to remove her from office.

Ms. Yingluck says her inability to pay the farmers is due in part to ongoing demonstrations, which have limited her government’s authority to make plans and decisions.

“Many financial institutions have been reluctant to approve loans because of worries about legal implications and threats from antigovernment protesters,” said Finance Minister Kittiratt Na-Ranong.

However, he said a number of private financial institutions have informed the government they are now considering granting loans to farmers.

Deputy Prime Minister Niwattumrong Boonsongpaisan did not reveal when the payment approved by the Cabinet would be disbursed, saying only that it would be “subject to a consideration” by the independent Election Commission beforehand.

Tuesday’s decision appears to be good news for some farmers. Yet the amount is only a fraction of the billions of dollars many more growers are owed.

According to Mr. Niwattumrong, the government is estimated to owe around 120 billion baht in payments to farmers who joined the latest round of the multi-billion-dollar subsidy program that began in October. It is now considering various options, including a debt moratorium and additional loans, to help alleviate their plight, said Mr. Niwattumrong.

Until those debts are resolved, fuming farmers say they plan to keep rallying. Some have even threatened to gather supporters from across the country to besiege state warehouses, take back grains and sell the rice themselves.

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